68 TEXAS JOURNAL OF OIL , GAS , AND ENERGY LAW [ Vol . 16:1
build out the applicable transportation facilities as part of its primary role in the project . Additionally , there will be a number of different investors , partners , and capital providers for each of the participants involved in the project . Each of these stakeholders will have unique concerns and requirements that will influence the perspective that each of the project participants has in negotiating the required project-level commercial arrangements . While there will be a number of contractual agreements among the various stakeholders of a project , this paper will focus on the principle commercial arrangements needed to produce , capture , and supply CO 2 as it moves through the processes involved in a CCUS project .
As noted above , currently , the primary economic driver of CCUS projects is the tax credits available to the capturer under Section 45Q . In CO 2 utilization projects , there will also be a revenue stream generated from the sale of CO 2 to the user that will contribute to the economics of the project . Given the interdependent nature of the processes involved in any CCUS project , both whether or not the requirements under Section 45Q are met and the volume of CO 2 available to generate those credits will be influenced by factors controlled by each of the participants in the project . Thus , the primary objectives that participants will have in structuring these commercial arrangements will be backstopping the success of these economic drivers and with them the ability of the project to be financed by third-party investors and capital providers .
To accomplish these objectives , these commercial arrangements must require that the processes and facilities utilized by the project meet the requirements of Section 45Q so that tax credits can be earned . Additionally , the risk of tax credits being recaptured due to leakage of CO 2 during use or sequestration should be addressed . Finally , the parties should attempt to secure availability of a minimum level of CO 2 as necessary to meet the anticipated economic assumptions underlying the business case for the project .
B . Structure of Commercial Contractual Arrangements for CCUS Projects
CCUS projects will typically involve some variation of the following types of commercial agreements for the delivery , use , or storage of CO 2 . These include agreements whereby the emitter agrees to supply the capturer with CO 2 from the applicable industrial facility ( which this paper will refer to as CO 2 Supply Agreements ) and one of two types of “ Offtake Agreements ” between the capturer and the user or storer , which addresses the delivery of captured CO 2 for use or storage . Offtake Agreements may take the form of a CO 2 Purchase Agreement ( if the capturer is selling the CO 2 to an end-user such as an oil and gas company that is conducting EOR operations ) or a CO 2 Storage Agreement ( if the capturer is simply delivering the CO 2 to the owner of a storage facility for sequestration ).
The structure of these agreements generally follows that of supply or purchase agreements for the delivery or processing of natural gas , with several im-